Thursday, March 31, 2011

The controversial proposed labor contract between the U.S. Postal Service and the American Postal Workers Union includes an unusual bonus for the world’s largest postal union: a USPS-funded incentive of up to $7,000 annually for thousands of “non-career” employees to join APWU.

The incentive would come in the form of a health-insurance benefit for “postal support employees” – the new name for casual and temporary workers. After one year on the job, they could sign up for employer-sponsored health insurance, with USPS paying 75% of the premium if they choose the "APWU Consumer Driven Health Plan". (See pages 173-174 of the contract for details.)

Only APWU members can sign up for the APWU health plan.

For an employee buying family coverage, the Postal Service share of the premium would cost $6,817 at current insurance rates, according to a union presentation. For employee-only coverage, USPS would pay $3,030.

Federal agencies are not allowed to encourage or discourage their employees from joining unions. Postal executives presumably believe that the indirect nature of the proposed incentive would not violate union-neutrality rules.

The proposed 4 ½-year contract, which faces a ratification vote next week, would allow significant increases in the number of PSEs so that they eventually might constitute nearly 20% of bargaining-unit employees. That means the healthcare provision could end up applying to about 30,000 workers.

The healthcare provision would give the APWU a way to gain new members from a group of employees who rarely join, helping to counter its membership losses from the Postal Service's elimination of career positions via retirements. It was part of the price postal executives are willing to pay for some valuable concessions it would gain from APWU, such as lower pay for new employees (See Is the APWU Eating Its Young?) and a greater ability to match staffing to fluctuating mail volumes.

The proposed contract has been attacked from both sides. Former APWU President William Burrus and others have criticized current APWU leadership for caving in to postal management and big mailers and for selling out future employees. Meanwhile, Republican Congressmen have labeled the deal as a giveaway to the APWU and have scheduled a hearing on the proposal.

What is becoming increasingly clear is that the proposed contract resulted from some extreme “horse trading”. The question is which side got the better horses.

Sunday, March 27, 2011

Here's one way labor unions are hindering staff reductions at the U.S. Postal Service -- telling their members the truth about the challenges of retiring from USPS.

Consider this statement from a recent article for members of the National Association of Letter Carriers:

"The Office of Personnel Management continues to struggle with timely completion of new retirees’ annuities," writes Ernest Kirkland, NALC Director of Retired Members. "Again, each member who is considering retirement should try to have a five-month reserve of his or her anticipated retirement income available prior to retiring. Saving 440 hours of annual leave for payment at retirement will be a great start toward that goal."

Kirkland also told Federal Times a few days ago week that the union is getting an increasing number of calls from recently retired members who are getting lower pension payments than they should while the Office of Personnel Management calculates their correct payments. The interim payments are sometimes half of what the retirees are supposed to be paid, according to the Federal Times' Stephen Losey.

The cash-strapped Postal Service hopes to reduce employment by 30,000 people this year, mostly through retirement, helped in some cases by early-retirement incentives. But how many more would retire if the process were smoother -- for example, as straightforward as it usually is for large private employers? (After all, influential Congressman Darrell Issa, R-CA, says USPS could stand to lose 200,000 employees.)

NALC has filed a grievance against the Postal Service for failing to provide retirement counseling to employees as required by law. And officials of the American Postal Workers Union have warned about USPS providing pension estimates to employees that were too low or just plain wrong.

The irony here is that union officials have a vested interest in discouraging retirements to prevent reductions in the number of active, dues-paying members, and yet they are trying to smooth the retirement process for employees. Meanwhile, the politicians and postal executives who are so eager to cut the Postal Service's workforce seem to have been silent on these hurdles in the retirement process.

Fortunately, the OPM is battling the backlog of retirement applications from federal and USPS employees by hiring new claims processors and having them work overtime. Let's hope it can clean up the process before the Postal Service runs out of money.

Update: This article wasn't as clear as it could have been, which caused some people to misinterpret my view and think that I am blaming the unions. I was being sarcastic; I certainly don't blame the postal unions for telling the truth. I was trying to point out that the unions are addressing a problem that management should be eager to solve.

Other articles on the Postal Service's problems with retirement benefits include:

Saturday, March 26, 2011

Maybe my incompetence in search-engine optimization is paying off. Or maybe Google really has figured out how to make Web searches more relevant.

The Internet world has been all aflutter the past month because of changes Google made to its top-secret search algorithms that it says affected 11.8% of queries. Some publishers are indicating their Google traffic is up a bit, while other sites some with seemingly good content have seen Google traffic drop by 40% or more.

Officially called the Panda update but sometimes referred to as the Farmer update, the changes were meant, in Google’s words, to “reduce rankings for low-quality sites—sites which are low-value add for users, copy content from other websites or sites that are just not very useful. At the same time, it will provide better rankings for high-quality sites—sites with original content and information such as research, in-depth reports, thoughtful analysis and so on.”

For Dead Tree Edition, the changes seem to have increased Google traffic by about 18%. I say “seem” because search traffic to this little blog fluctuates greatly – and generally constitutes less than 10% of total visitors.

Dead Tree Edition is on the first page of results for some really long-tail search terms like “son of black liquor”, “NewPage bankruptcy”, and – everyone’s favorite -- “cardboard porn”. But the most common search terms are variants of “dead tree”, such as “dead tree blog”, which suggest that people heard or read about an article but didn’t have a link to follow. Or maybe my regular readers haven’t figured out how to use bookmarks, Twitter, RSS, or LinkedIn.

Anyway, I figured the best way to assess Panda was to compare the traffic from Google searches to that for Yahoo! searches, under the assumption that Yahoo! has made no significant changes to its search methods.

During the month leading up to the change, which Google says it started rolling out on Feb. 23, there was an average of 5.61 visitors coming to this blog from Google for every one coming from Yahoo. So far this month, the average daily ratio is 6.61, an increase of 17.8%.

I ignored the Feb. 23-28 period because of reports that it took Google a few days to implement Panda completely. With slightly different assumptions about what periods to study, the increase in the Google-to-Yahoo ratio was never below 12% and was sometimes as high as 21%.

Of course I’m biased, but it makes sense to me that Google’s update would favor a site that publishes only original content and – because of my own ignorance and Blogger’s limitations -- doesn’t play any SEO games. I just hope Panda also punishes those sites that republish my articles without permission or attribution.

Thursday, March 24, 2011

A divided Postal Regulatory Commission just issued (early afternoon Eastern time) its advisory opinion on whether the U.S. Postal Service should be allowed to discontinue Saturday delivery.

After a complex analysis, each commissioner wrote a separate opinion suggesting that the commissioners agreed that USPS's projections regarding cost savings are too rosy. But they could not agree on whether it should be allowed to switch to five-day delivery.

While agreeing on many points, "we did not agree on the broader policy concerns arising from the Postal Service Proposal," wrote PRC Chairwoman Ruth Goldway.

Here is the passage in question, starting at the 2:28 mark in the video (which was uploaded to YouTube today):

"Postmaster General, I appreciate the fact that you have come in and re-looked anew at your predecessor's initial ideas, and I have seen some innovative and, I think, very worthwhile suggestions you have made, and some of them are tough. As we were talking before we came out here, the good news is there are at least two post offices that need to be closed in every congressional district in America. Let's hope there is not one or three in mine."

Issa's words are open to interpretation, but seeing the video leads me to believe he was making a joke and not a threat. (Some advice, Congressman, if you're thinking about becoming a comedian: Don't give up your day job.)

I'm guessing he meant that if an average of two post offices were closed in every Congressional district, fewer than two closings in his district would look like special treatment and more than two would get him into trouble with his voters. But I welcome other interpretations (and think I fixed the problem that prevented readers from commenting on this blog).

After a long history of politicians complaining about inefficiency at the Postal Service but then blocking any austerity moves in their own district, some of us may have been too quick to conclude that Issa was playing the "not in my district" game. The proof will be when the inevitable post office closings and USPS job cuts hit home in his district.

Issa's brief statement also left room for interpreting his position on ending Saturday delivery. Saying that the Postal Service should deliver "a level of service that Americans have come to expect," he added: "If at all possible, we want that to include all categories of mail, all types, and all delivery dates, meaning six days a week is a goal if we can achieve it."

But this statement is certainly clear: "The cost of mail is a cost to American commerce and to the American people, so every time there is an increase in postal rates, it is to the detriment of American efficiency and disposable income to the American people."

Tuesday, March 22, 2011

Rep. Darrell Issa, the Republican Congressional leader who has been boldly advocating a downsizing of the U.S. Postal Service, suddenly doesn't sound so brave.

At a recent Congressional hearing, according to postal commentator Eddie Mayhew in his newsletter for publishers, Issa said there were probably post offices in every district that could be closed but that he hopes “there isn’t one or three in mine." Is this really the same man who just four months ago told The Washington Post, "There are too many postal workers, too many distribution centers, too many post offices and a reluctance to make those changes"?

I have news for you, Congressman: Every postal worker, every distribution center, and every post office is in some Congressman's district. If you, as the chief proponent of USPS downsizing, can't "man up" and drop the "reluctance to make those changes," how can you expect your Congressional colleagues to cooperate with any meaningful rightsizing of the Postal Service?

While grandstanding politicians yack about making the Postal Service more efficient, the Postal Service has been busy actually doing something -- like eliminating 25,000 career positions in the past year. This Friday, it will announce another 7,500 job cuts – this time including real employees instead of just vacant positions – along with the closing of some facilities.

If some of those places and people are in Issa's district, will he remain true to the cause of downsizing the Postal Service? Or will he start whining like a West Virginia Democrat about how his district needs every Postal Service job it can get?

The Santa Ana, CA processing and distribution center is within commuting distance of Issa's district -- and is the kind of small distribution facility often targeted for consolidation. If it becomes the subject of an Area Mail Processing study, will Issa still proclaim there are "too many distribution centers" and let the Postal Service carry on with consolidation? Or will he demand an investigation and use his committee chairmanship to punish the Postal Service for practicing what he preaches?

Say what you will about the Postal Service, its cost-cutting moves the past few years have dwarfed anything done by other government agencies -- including Congress. Especially Congress. Postal executives are making the tough decisions. Now let's see if Issa and other Congressional leaders have the cojones to do the same.

Democrats in the last Congress tried to dress up giveaways and pork-barrel projects as "economic stimulus," but the voters didn't buy it. Seeking fiscal sanity, millions who had voted for Obama two years earlier decided to hand the House's reins over to the GOP.

By the same token, if Issa and his allies talk "austerity" but really mean "not in my district," voters will turn on them as well.

Thursday, March 17, 2011

Although the American Postal Workers Union has done all the crowing about its new labor contract, the deal includes several items that could save the U.S. Postal Service significant expenses.

The USPS' contract with its largest union is mostly good news for current APWU members, but will mean lower pay and more erratic schedules for new hires, postal analyst Alan Robinson pointed out today.

"All employees hired after the contract is signed start at a lower rate than now exists," in some cases 26% lower, Robinson said in an in-depth analysis on his Courier, Express, and Postal Observer blog. "All employees hired after the contract is signed have a lower top salary than current employees even after they become career employees."

Nearly a year ago, the General Accounting Office urged the Postal Service to adopt such a two-tiered wage system that offers new employees less compensation while "grandfathering" current employees. As Dead Tree Edition noted at the time, that practice is sometimes known in the labor movement as "eating your young" because of its impact on future union members.

Some cities have signed such extreme eat-your-young labor contracts that they now have difficulty recruiting and retaining firefighters and police officers. By comparison, the APWU is only snacking on its future members.

Robinson also points out that the contract has several features giving the Postal Service "more flexibility to match actual hours to work". Among those are a provision that guarantees new full-time employees only 30 hours per week while allowing them to be scheduled for up to 48 hours and another that would allow their shifts to be anywhere from 4 to 12 hours long. For current full-timers, the weekly hours will vary from 40 to 44, while a daily shift will be 6 to 12 hours long.

Two more items about the new contract:

1) A new provision on excessed employees may dampen APWU's opposition to the consolidation of processing and distribution centers, which have been proceeding at a record pace lately. Some APWU members whose positions were eliminated have been transferred on short notice to another position more than 100 miles away, but the new contract would limit the distance to 50 miles.

2) "The Postal Service leaves the impression that the contract was a giveaway to employees," Robinson writes, by failing to explain how the contract will enable USPS to reduce costs. The Postal Service's latest cost-saving efforts seems to be relying on independent bloggers rather than a public relations department to present its case in controversial matters -- like Robinson on this contract or Dead Tree Edition earlier this month on alleged plans to close 3,000 post offices.

That number includes only $65 million, so far, for #1 pulp manufacturer International Paper and nothing from #2 Georgia Pacific, which is privately held. Both giants seem likely to join or surpass Packaging Corp. of America, Weyerhaeuser, and Domtar, each of which recorded or expects to record more than $200 million (pretax) in CBPCs.

CBPC is supposed to subsidize the production of environmentally friendly biofuels, but in the case of pulp manufacturers it’s a pure giveaway of taxpayer money. The credits are being shelled out to the manufacturers for burning black liquor as a power source, a standard industry practice, in 2009, but the manufacturers didn’t even know they would qualify for the credits until 2010.

IP recorded 2010 tax credits on less than 2% of the black liquor it burned in 2009. That was the portion that it did not mix with diesel fuel to take advantage of the original black liquor tax credits, which exploited a loophole in the federal Alternative Fuel Mixture (AFM) program.

IP has not decided whether to repay any of its $2.1 billion in AFM credits to get the more lucrative, but taxable, CBPC funds. But its 2010 annual report says it might end up switching some or all of its AFM credits for CBPC. That would be worth up to another $2.1 billion pretax and probably at least $400 million after taxes.

PCA leads in Son of Black Liquor credits so far, partly from paying back AFM credits to get $146 million ($33 million net gain) in CBPC, plus another $107 million for the “proprietary biofuel process” at its Filer City, Michigan mill. It estimates it has another $200 million in CBPC available to offset future income taxes until the credits expire in 2015.

Rock-Tenn plans to trade its AFM credits for CBPC over the course of several years, resulting in an estimated pre-tax gain of $112 million. Pulp makers that have claimed or estimated less than $100 million from Son of Black Liquor are Temple-Inland, Clearwater Paper, Wausau, Rayonier, Buckeye Technologies, Kapstone Paper and Packaging, and Mead Westvaco.

Nine companies that benefited from the original (AFM) black liquor credits have not claimed or estimated Son of Black Liquor handouts – AbitibiBowater, Appleton, Boise, Graphic Packaging, Glatfelter, NewPage, SAPPI, Smurfit-Stone Container, and Verso. Several of these companies are unlikely to benefit because of their history of unprofitability; CBPC can only be used to offset income taxes.

Monday, March 7, 2011

Recent widespread press reports and public outcry about supposed plans to close 3,000 post offices were a misunderstanding, U.S. Postal Service officials said today.

The trouble started when USPS gave the Postal Regulatory Commission a list of about 3200 stations and branches that would be part of a study of which facilities to discontinue, the Postal Service said in a PRC filing today.

"Public interest was heightened when customers and the press together assumed this meant the Postal Service was planning to close all 3200 offices despite postal assurances to the contrary," the document said. "The results, especially when well under 200 offices ultimately faced discontinuance, caused unnecessary concern and confusion for postal customers and their communities, and were harmful from public relations and customer goodwill perspectives."

Postal officials provided the PRC today a list of 356 postal facilities where service has been suspended. But it asked the PRC to keep the list of post offices, stations, and branches secret for now to avoid another round of public confusion.

"Of course, any facility formally proposed for discontinuance also becomes a matter of public knowledge amongst its customers, the USPS filing said. "All suspended retail facilities that undergo the discontinuance process will be the object of local attention very soon thereafter."

Saturday, March 5, 2011

Many Postal Service employees report working longer hours recently, and the statistics back them up: Overtime hours have increased more than 11% this fiscal year versus the same period last year even though the workforce is smaller.

Complaints about letter carriers out delivering mail until 8 p.m. may not be isolated cases. Payroll statistics the U.S. Postal Service released yesterday indicate that overtime hours per full-time city delivery carrier have increased more than 20% over last year.

Part-time city carriers are also keeping busy, working nearly one hour of overtime for every six of straight time from October of last year through Feb. 26. (Makes you wonder why they're called "part time".) Their overtime is up 8% this year even though their straight time hours are down 8%.

The trend of declining straight-time hours -- which indicates fewer employees -- coupled with more overtime shows up in other crafts, especially mail handlers (8% more OT) and clerks (up 5%).

For all bargaining-unit employees, overtime is up 12% even though straight time is down 4%. The typical bargaining-unit employee works one hour of overtime for every 10 of straight time.

Two areas of the Postal Service not showing net workforce reductions are Headquarters and "Area/Operations Offices"; total hours are up about 3% in both cases.

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